Small businesses scramble to keep top staffers

People are quitting their jobs at a faster clip and that’s pushing small business owners to work harder to hold onto top talent.

Dance studio owner Andrea Bisconti has experienced the challenge firsthand. When Kellie Love, an instructor there, said she was planning to leave to start a business of her own, Bisconti decided to act. Love inspires students to keep coming back for more lessons and brings in more than a quarter of the studio’s revenue, says Bisconti, owner of a Fred Astaire Dance Studio in Willoughby, Ohio.

“My most terrible fantasy was I would see students walk out the door in droves and I would be scrambling,” Bisconti says.

As the economy and job market improve, keeping the best employees is becoming vital for small businesses. Forty-three percent of owners are working to keep top staffers, according to a recent survey by Principal Financial Group. The reason: A growing number of employees are giving notice. The Labor Department reported more than 2.5 million people quit their jobs in July, up from 2.3 million a year earlier.

The trend is expected to continue. Thirty-eight percent of workers plan to change employers in the next five years, according to a 2014 survey by the management consultancy Hay Group. That’s up from 30 percent in 2010.

Bisconti figured out a way to keep Love. They are negotiating to make her a business partner. Other owners are using strategies such as communicating and coaching, creating a healthy environment and giving raises.

COMMUNICATE AND COACH

Jon Lal talks continually with the 25 employees of BeFrugal.com, walking around the office at the start and end of the day and chatting about work and staffers’ personal lives. He brings lunch in for everyone once a month.

The conversations give Lal a sense of whether staffers are satisfied or want to advance. He has kept one employee for eight years by giving her a series of new assignments to keep her motivated.

The approach is critical to retaining employees and avoiding unexpected resignations at the Boston-based company, which runs a website with coupons and cash-back deals, he says.

“If (a departure) comes as a surprise to you, very often it means you have not been in very close touch with what’s going on with that individual,” Lal says.

Communicating regularly with employees also gives owners a chance to provide feedback, something staffers want, says Michael Timmes, a consultant with HR provider Insperity, based in Houston. And it’s an opportunity to teach employees new skills.

“People want to be coached (and) want to be given guidance,” Timmes says.

A HEALTHY ATMOSPHERE

At FutureAdvisor, head of recruiting Chris Nicholson polled the investment advisory company’s 30 employees about why they stay. Most said it was the positive atmosphere created by the San Francisco-based company’s owners. They mentor staffers, set realistic goals and promote a healthy balance between work and their personal lives, Nicholson says.

“If the top management has their heads screwed on straight, the whole organization that grows out around them is going to be in a lot better shape,” Nicholson says.

Legacy Publishing trains its managers to speak to the company’s 95 staffers in a positive way, to give constructive criticism and to pay attention to workers’ quality of work life, says Rhonda Tracy, director of human resources for the Westbrook, Maine, company, which makes instructional software.

“We spent a portion of a meeting yesterday coming up with ways to make the employees’ days better,” Tracy says. One solution: Getting rid of some of the small, tedious tasks that can frustrate or bore them.

SHOW THEM THE MONEY

Owners and HR consultants say most people don’t leave a job solely because of pay unless another employer offers them so much money they can’t refuse. Job satisfaction is more important for many employees. But pay can be an issue at companies that slashed salaries during the recession, says David Lewis, president of OperationsInc, a human resources provider based in Norwalk, Connecticut. And workers at many of those businesses had to take on additional responsibilities as jobs were cut. They’re still carrying a heavy workload.

“At some point, it’s no longer sustainable to give people 2 or 3 percent increases on a base salary you’ve already reduced in some cases by 20 percent in 2009,” Lewis says.